Attendees at this year’s FBAC Capitol Conference heard important updates on key issues from top political experts. Here’s a sampling.
Nevada governor gives Newsom a dose of his own medicine
Political consultant Rob Stutzman, founder of Stutzman Public Affairs and a chief strategist for former Governor Arnold Schwarzenegger, told Capitol Conference attendees that Governor Gavin Newsom, who has happily traveled to red states to lecture them about the need to adopt California’s liberal leanings, recently got a dose of his own medicine.
“Joe Lombardo, the Republican governor of Nevada, sent him a letter opposing California’s proposed oil refineries profits cap because 88% of Nevada’s gasoline supplies come from California refineries. If more refineries close because of the tax and there’s less supply, that wouldn’t be good for Nevada drivers – and Nevada is an early presidential caucus state in 2028,” he said. (Newsom responded by accusing the Nevada governor of politicizing the issue.)
After years of trying to reach some accommodation with progressive Democrats, business interests have decided that approach isn’t working and that they need to aggressively fight back against government policies that harm businesses. Both Stutzman and Rob Lapsley, president of the California Business Roundtable, said businesses are starting to be less willing to play around the edges and are fighting harder.
Stutzman noted that McDonald’s franchise owners were livid when Democratic lawmakers passed legislation that almost overnight increased the minimum wage for fast food workers to $20 an hour. They were also livid that they were not at the table when the behind-the-scenes negotiations were going on. (Remember the old political adage – if you’re not at the table you’re going to be on the menu.)
So the owners, mainly family businesses, banded together to defeat Asm. Chris Holden, D-Pasadena, during the March primary in his bid for L.A. County supervisor, and narrowly missed knocking Asm. Kevin McCarty, D-Sacramento, off the November ballot as he seeks to become mayor of Sacramento.
“This is a sign of coming attractions for the business community. Politicians need to start worrying about business coming after them,” Stutzman said.
Lapsley said that newfound recognition that businesses needed to fight back is also manifested in several measures likely to appear on the November ballot (see below). “We are going on offense,” Lapsley declared.
Pro-business initiatives headed for November ballot
Two of those measures are strongly supported by FBAC:
- The Taxpayer Protection and Government Accountability Act (TPA), which would give voters the final say on all new and higher taxes;
- And the Fair Play and Employer Accountability Act, which would overturn the ruinous Private Attorneys General Act (PAGA) that has caused employers to pay millions of dollars over often-minor labor laws – most of which went to trial lawyers, not employees.
Lapsley, who is helping lead the campaign to enact the TPA, said the measure would restore 2/3 approval thresholds for all future tax proposals and would require local governments to put any tax or fee measure approved with less than a 2/3 vote since 2022 before the voters again. Governor Newsom, the Democratic leadership in the Legislature and local governments fiercely oppose the measure and are trying to remove it from the ballot. The state Supreme Court recently heard arguments but signaled they were unlikely to do so. The court must rule by the June 27 deadline to put measures on the November ballot.
“During the Supreme Court hearing, the governor’s attorneys said TPA would cause a major disruption to government services and that the power to tax should stay with the Legislature and its staff because they’re the only ones who understand it. The government will never willingly share that power with the public. The governor and the legislature do not want to see anything on the ballot about taxes at all,” he said.
Lapsley warned that if TPA is defeated in November, it will open the door to billions of dollars in new taxes.
FBAC Political Director Robert Rivinius said the power to raise taxes must be in the hands of the voters, not the politicians.
“California is becoming too expensive for working families and family businesses. We need to give Californians the final decision on raising their taxes and better accountability for how state and local governments spend their money. FBAC will work hard alongside our coalition partners to pass the TPA this year,” Rivinius said.
Brian Maas, president of the California New Car Dealers Association, which is leading the campaign to reform PAGA, said lawmakers don’t want several pro-business measures on the November ballot, and that conversations are taking place between proponents and government leaders to come up with a compromise.
“We want PAGA reform however we can get it,” Maas said. “Conversations are taking place – let’s see if we can get the Legislature to fix the problem they created. We have until June 27. If the Legislature has enacted effective PAGA reform by then we might be disposed to remove the measure from the ballot.”
“PAGA lawsuits are the bane of family businesses, and the law must be reformed,” Rivinius said. “Family businesses have become major targets of predatory lawsuits because it’s almost always far cheaper to settle a case than take it to court. We hope the Legislature will fix its mistake, but if they don’t FBAC and our members will work hard to ensure the ballot measure succeeds.”
FBAC Member briefs attendees on Board of Equalization
Ted Gaines, owner of FBAC Member Gaines Insurance and vice chair of the state Board of Equalization (BOE) reminded attendees that having an elected board to hear appeals on taxation rulings is important. The BOE today administers 34 tax and fee programs and acts in an oversight capacity to ensure compliance by county assessors with property tax laws, regulations, and assessment issues. The Board also hears various taxpayer appeals. But he pointed out that two new tax administration and appeals agencies created in 2017 and 2018 with members appointed by the Governor uphold virtually all findings by the agencies.
PAGA expert offers tips for business owners
Bruce Scheidt, managing shareholder with FBAC Regional Sponsor Kronick, Moskovitz, Tiedemann & Girard, discussed the PAGA reform measure but offered tips to business owners to follow until the law is reformed.
- Make sure you classify your exempt employees correctly.
- Have legally compliant policies. Courts like to see that you’ve done that when determining whether to give you the benefit of the doubt.
- Monitor your time punches.
- Make employees sign every pay period that they didn’t work off the clock.
- Have mandatory arbitration agreements with employees. If an employee loses arbitration, he loses standing to file a PAGA claim.
Thanks to legislators for addressing Capitol Conference
Two business-oriented legislators – Assembly Members Vicente Valencia, D-Anaheim, and Diane Dixon, R-Newport Beach – made time to stop by the conference and say a few words. Valencia mentioned that he grew up working in his parents’ minimart in Orange County and appreciates the importance of family businesses. Dixon said the state should encourage family businesses to remain in California and not see businesses as the enemy.